Monopolistic Competition


The concept describes monopolistic competition - a market structure in which many firms sell products that are similar but not identical. It explains the strengths and weaknesses of the concept and outlines useful implementation advice and factors for success in achieving above-average profits in this type of market structure.

Technique Overview

Monopolistic Competition

Monopolistic Competition Definition

Monopolistic competition is the market structure in which many companies sell products or services that are similar but not identical. This market structure lies between perfect competition and oligopoly. Although similar to perfect competition where there are many sellers, monopolistic competition emphasises product differentiation to the extent that every company is a price maker rather than price taker. This can result in extraordinary profits. In this type of market structure there are no barriers to entry and companies can enter (and exit) without restriction (Mankiw, 2009).

Monopolistic Competition Description *

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Business Evidence

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Examples of Monopolistic Competition *

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Business Application

Monopolistic Competition Implementation *

Success Factors of Monopolistic Competition *

Measures of Monopolistic Competition *

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Professional Tools

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Further Reading

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Monopolistic Competition References (4 of up to 20) *

  • Borenstein, S., 1991. Selling costs and switching costs: explaining retail gasoline prices. RAND Journal of Economics, 22(3), pp.354-369.
  • Bughin, J., Djelic, B., Schröder, J., 2000. Is anyone out there listening? The McKinsey Quarterly, June. Available at: https://www.mckinseyquarterly.com/Media_Entertainment/Radio_TV/Is_anyone_out_there_listening_818.
  • Clifford, S., 2011. Would You Like a Smile With That?. The New York Times, Aug 6. Available at: http://www.nytimes.com/2011/08/07/business/pret-a-manger-with-new-fast-food-ideas-gains-a-foothold-in-united-states.html?ref=fastfoodindustry.
  • Duffy, J., 1993. Economics. John Wiley and Sons.

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